Apr. 26, 2012

Sen. Randy Brock, R-Franklin, reviews a compromise that ended hours of disagreement over what message lawmakers should send on the electrical utility merger. The proposal Brock was explaining to colleagues would set a future policy on returning rate increases raised to help financially strapped utilities must be returned through credit or refund and the utilities can't recover that money through rates. / NANCY REMSEN, Free Press

Written by

Nancy Remsen and Terri Hallenbeck

MONTPELIER — Sen. Tim Ashe, D/P-Chittenden, scribbled an idea on a scrap of paper early Thursday morning as his Senate colleagues wrangled in a caucus over how to express their displeasure with the treatment of ratepayers under a proposed merger of two Vermont utilities.

As senators headed upstairs to resume their debate on the merger matter, Ashe shopped his idea and it began to catch fire.

His proposal came near the end of a legislative session in which a group of lawmakers transcending party lines has homed in on a $21 million investment Central Vermont Public Service customers made in the utility 10 years ago — by paying higher rates to help the company out of a jam. If the company is sold, customers are supposed to receive benefits from their investment.

Yet the terms of a planned merger of Central Vermont Public Service and Green Mountain Power wouldn’t give that $21 million back to ratepayers directly, leading to unease among many legislators.

Ashe’s measure addresses this concern by saying it is state policy to return money directly to power company customers if they are asked to help bail utilities out of financial difficulties. This would apply to the pending merger.

Frustrated lawmakers — first in the Senate and then in the House — saw in the amendment the possibility to reach consensus on an issue that had already consumed hours as pressure was on to wrap up work on other bills. By early afternoon, a version vetted by numerous senators ended up with 23 of 30 senators as sponsors. The Senate voted 27-3 to substitute it for previous proposals.

That prompted the House to halt debate on its merger proposals and dispatch a committee to take testimony on the Senate amendment.

If senators were smiling, Gov. Peter Shumlin wasn’t.

The Democratic governor fired off a statement slamming the amendment in the Democrat-controlled Senate almost before the vote tally was announced. He said the decision about returning money to ratepayers should be left to the Public Service Board.

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“This matter is now in the hands of the Board,” Shumlin’s statement read. “The Senate’s action today interferes with an open PSB docket, undermines the credibility of the regulatory process, and is an extreme overreach of legislative jurisdiction.” Shumlin, who was Senate president pro tempore before becoming governor last year, also criticized lawmakers for wasting time on this matter when they should have been wrapping up their work for the year.

The pace of progress toward adjournment next week has been slow. The Senate has dozens of bills awaiting action and worked into the night Thursday trying to complete deliberations on the budget — the priority bill for any session.

Still, there were signs the legislative logjam was beginning to break up. Senate and House negotiators shook hands on new maps for legislative districts shortly before 6 p.m.

Leaders of both the House and Senate have said lawmakers will work Saturday and Monday with the goal of adjourning no later than May 5.

The back story

The proposed $702 million purchase of Central Vermont Public Service by Green Mountain Power owner Gaz Metro is pending approval from the Public Service Board, which has taken months of written and oral testimony and is expected to rule in June. Disgruntlement over parts of the deal has been brewing all year in the Legislature.

AARP-Vermont has blitzed airwaves with an advertising campaign calling for the $21 million to be returned directly to ratepayers. The organization has asked the Public Service Board to require that.

An agreement between the Public Service Department and Green Mountain Power instead calls for the merged utility to invest $21 million in energy efficiency programs, which would be required to return a $46 million value to customers. Opponents in the Legislature have said they were particularly troubled by the notion that Green Mountain Power could recoup that investment through higher electric rates and was guaranteed a 7 percent return on the investment.

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The Public Service Board approved a similar agreement when Gaz Metro bought Green Mountain Power in 2007.

The Shumlin administration and the utilities have implored legislators to let the Public Service Board decide the details of the deal. Green Mountain Power executives have said requiring the utility to pay $21 million up front could kill a deal that promises to save customers $144 million by combining the two companies.

Senate debate

Senators took up the $21 million question Wednesday when Sen. Peter Galbraith, D-Windham, proposed adding a provision to the budget bill ordering the commissioner of public service to renegotiate an agreement with the two electric companies concerning the return of $21 million to CVPS ratepayers.

Senators split over whether the Legislature was meddling in matters outside its jurisdiction.

Thursday morning, they appeared no closer to resolving their differences during a lengthy caucus. Senators disagreed on the facts of the merger, with Cummings noting, “We are flying by the seat of our pants. We haven’t taken any testimony.”

Sen. Virginia Lyons, D-Chittenden, urged caution and said, “I won’t support our intrusion into the Public Service Board process.”

Sen. Randy Brock, R-Franklin, countered the issue was simple. “I don’t think I have seen an issue that has so outraged people on the street,” he said. He summed up the complaint as an “egregious example of the ratepayers not being treated appropriately.”

Sen. Claire Ayer, D-Addison, warned that interfering in a regulatory process could have repercussions in other arenas. “If a big investor wants to come here, how are they going to trust the process?” Ayer asked.

The caucus ended without consensus, but when support began to build for the Ashe amendment in private conversations outside the Senate chamber, Senate President Pro Tempore John Campbell, D-Windsor, re- arranged the Senate schedule to give the deal time to gel.

Adoption came quickly when senators finally returned to the merger matter. “This is a solution reached among a large group of senators,” Galbraith explained when he introduced it. “It simply provides a policy direction.”

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Lyons said it still seemed to interfere with the Public Service Board process. “I’m not sure this actually solves the problem,” she told the Senate. “It doesn’t for me.”

It did, however, for a strong majority who approved the amendment by a voice vote.

House discussion

Members of the House had spent much of the day debating their own proposed amendment regarding the utility merger.

That amendment would require the Public Service Board to have Green Mountain Power return the $21 million directly to CVPS customers, leaving up to the board to decide how to divide it among residential and commercial ratepayers.

In a morning caucus on the issue, Rep. Cynthia Browning, D-Arlington, lead sponsor of the amendment, said, “This is a matter of economic justice and corporate accountability.”

Rep. Tony Klein, D-East Montpelier, implored colleagues to vote against the amendment, which he said would undermine a Public Service Board process that has worked well for decades.

“If this amendment passes, I’m going to introduce an amendment tomorrow that will disband the Public Service Board because there’s no need for it to exist,” Klein said.

In mid-afternoon, the House discussion abruptly halted when word spread that the Senate had voted by a wide margin for a slightly different amendment. Delaying action on the Browning amendment, supporters headed over to the Senate for a look at the wording.

The House Commerce Committee heard from Galbraith and legislative lawyers before refusing to endorse it, just as the committee had turned down Browning’s amendment.

Rep. Patti Komline, R-Dorset, said that means supporters of the Browning amendment will bring that amendment back up today on the House floor for a vote.

Whatever happens with that vote, the Senate amendment will be part of the budget bill that comes back over to the House and goes to a House-Senate conference committee in the coming days.